ORDER GRANTING FINAL APPROVAL OF CLASS SETTLEMENT AND
PLAN OF ALLOCATION AND DISMISSING CASE

DAVID
M. LAWSON United States District Judge.

Pursuant
to notice, the Court conducted a fairness hearing on November
23, 2016 to determine whether a settlement agreement should
be given final approval on behalf of the certified settlement
class in this case. The Federal Rules of Civil Procedure
require court approval of settlements in class actions.
Fed.R.Civ.P. 23(e). Rule 23(e) states that “[t]he
claims, issues, or defenses of a certified class may be
settled, voluntarily dismissed, or compromised only with the
court's approval.” Rule 23(e)(2) states that
“[i]f the proposal would bind class members, the court
may approve it only after a hearing and on finding that it is
fair, reasonable, and adequate.” As a part of this
process, “[a]ny class member may object to the proposal
if it requires court approval under this subdivision (e); the
objection may be withdrawn only with the court's
approval.” Fed.R.Civ.P. 23(e)(5). The approval of a
proposed settlement ordinarily involves a two-stage
procedure. “First, counsel submit the proposed terms of
the settlement and the judge makes a preliminary fairness
evaluation. . . . Once the judge is satisfied as to the . . .
results of the initial inquiry into the fairness,
reasonableness, and adequacy of the settlement, notice of a
formal Rule 23(e) fairness hearing is given to the class
members.” Manual for Complex Litigation §
23.632-.633 (4th ed.); see also Tennessee Ass'n of
Health Maint. Orgs., Inc. v. Grier, 262 F.3d 559, 565
(6th Cir. 2001).

On
August 26, 2016, the Court granted preliminary approval of
the settlement agreement under Federal Rule of Civil
Procedure 23(e). The Court entered an amended order granting
preliminary approval, accelerating the date for the approval
hearing. The order directed that a written notice to the
class be given by September 2, 2016 via first-class mail.
Plaintiffs' counsel retained Simpluris, Inc. of Costa
Mesa, California as the agent of the named plaintiff and
class counsel to give notice in the manner approved by the
Court, and ultimately to administer the settlement, process
claims, and make distributions. The Court approved the
retention of Simpluris, Inc. as the settlement administrator.

Under
the order preliminarily approving the class settlement,
absent class members were given until October 17, 2016 to opt
out of the settlement or file objections. The parties
identified a potential settlement class consisting of 2, 226
members. Simpluris, Inc.'s Settlement Administrator
Jarrod Salinas has certified that as of September 2, 2016,
the Settlement Administrator sent Notice and Claim Form
Packets to 2, 171 class members via first-class mail, and
that class counsel sent settlement notification letters to 55
opt-in plaintiffs. In addition, on September 2, 2016 the
Settlement Administrator sent Notice and Claim Form Packets
via email to 1, 936 class members.

As of
the date of the hearing on the final approval of the
settlement on November 23, 2016, no class member objected to
the terms of the proposed settlement, and one member
requested to be excluded from the class. No absent class
member requested an opportunity to address the Court
regarding the settlement at the final fairness hearing.
Simpluris represents that as of November 11, 2016, 559 class
members, 54 opt-in plaintiffs, and the named plaintiff filed
claims, for a total of 614 claimants.

As
noted in the order preliminarily approving the settlement,
the settlement class consists of all current and former Red
Robin servers who worked for the various defendants in
Michigan at any time from February 1, 2014 until entry of the
Preliminary Approval Order. The settlement class applies only
to the plaintiff's (and absent plaintiffs') state law
claims, and to those plaintiffs who have opted into the case
under the FLSA. It does not include any FLSA claims for the
absent plaintiffs. The settlement agreement calls for the
defendants to establish a settlement fund of up to $445, 000
to pay claims by the plaintiff and class members, with the
additional condition that the defendants would pay at least
$180, 000 to claimants, net of costs, attorney's fees,
and settlement administrative expenses. Each class member who
submitted a timely claim originally was to receive a payment
of 28 cents per hour for each hour that he or she worked for
any of the defendants within the State of Michigan during the
class period. In exchange, the plaintiff would dismiss the
case with prejudice and release all of the individual and
class claims.

The
defendants represented that the total number of hours worked
by all 2, 226 servers during the class period was 1, 567,
650, within a 10% margin of error. The 614 claimants
represent a participation rate 27.6%, and they have submitted
claims for approximately 562, 500 hours, which is
approximately 35.9% of the number of hours worked during the
class period. Because of the provision for a minimum payout,
each claimant will receive 32 cents per hour for each hour
worked for any of the defendants within the State of Michigan
during the class period. According to the Settlement
Administrator, the highest share for any claimant will be $1,
531.47 and the average share will be $293.12. The named
plaintiff will receive a banner award of $5, 000. Moreover,
the Settlement Administrator, Simpluris, Inc., will receive
and process the claims, and the defendants will pay the
expenses of settlement administration, which Simpluris
estimates to be $32, 286.

At the
fairness hearing, no one raised any objections to the
settlement or appeared in opposition. After hearing a
presentation by counsel, the Court made findings on the
record, addressing the factors set forth in International
Union, United Automobile, Aerospace, & Agricultural
Implement Workers of America v. General Motors Corp.,
497 F.3d 615, 631 (6th Cir. 2007), which are “(1) the
risk of fraud or collusion; (2) the complexity, expense and
likely duration of the litigation; (3) the amount of
discovery engaged in by the parties; (4) the likelihood of
success on the merits; (5) the opinions of class counsel and
class representatives; (6) the reaction of absent class
members; and (7) the public interest.” Ibid.
The Court finds that the likelihood of collusion or fraud is
minimal, as discussed further below. The case is complex and
involved multiple defendants operating under the umbrella of
the Red Robin restaurant chain, but with separate management
structures; a trial, therefore, likely would be protracted.
The parties engaged in extensive discovery, as outlined in
the plaintiff's brief filed in support of the motion for
final approval of the settlement. The merits question is far
from settled; each side has advanced potentially meritorious
issues on the questions whether some or all of the defendants
actually required their servers to participate in a
tip-sharing program, and whether certain employees who
received the shared tips - known as “food
expediters” - could participate lawfully in such a
program. Class counsel and the named plaintiff strongly urge
approval of the settlement. Absent class members are silent
in opposition, and the participation rate of claimants
mirrors a typical rate seen in similar litigation. Finally,
the interest of the public is served when wage-and-hour class
actions successfully redress claims of small value that
otherwise would not justify the costs of extended federal
litigation. The Court concluded, therefore, that the
settlement was fair, reasonable, and adequate. See
Fed. R. Civ. P. 23(e)(2).

The
Court expressed concern, however, that the attorney's fee
negotiated by counsel for the parties overstated the value of
plaintiff's counsel's contribution and might suggest
evidence of collusion. However, the plaintiff has filed a
supplemental brief addressing the point, and the Court is
convinced that the possibility of collusion is quite remote.
This is not a case in which the settlement metes out marginal
or illusory benefits on the class and bestows a generous
reward upon counsel. See In re Dry Max Pampers
Litig., 724 F.3d 713, 718 (6th Cir. 2013) (criticizing
class settlements in which there are “‘subtle
signs that class counsel have allowed pursuit of their own
self-interests and that of certain class members to infect
the negotiations'”) (quoting Dennis v. Kellogg
Co.,697 F.3d 858, 864 (9th Cir. 2012)). Rather, the
settlement confers genuine monetary benefits on the absent
plaintiffs that can be calculated objectively, and which
reflect a considered decision taking account of the maximum
possible recovery and the relative risk of failure of the
claims. Although the Court has an undelegable duty to ensure
that the class settlement is “fair, reasonable, and
adequate, ” Fed.R.Civ.P. 23(e)(2), and must
“scrutinize” the proposed settlement to ensure
that “the ‘fiduciary obligation[s]' of the
class representatives” have been met, In re
DryMax Pampers Litig., 724 F.3d at 718 (citing
Creative Montessori Learning Ctrs. v. Ashford Gear
LLC, 662 F.3d 913, 917 (7th Cir. 2011), the Court must
also be mindful that “[j]udges should not substitute
their own judgment” for that of the parties in their
assessment of the risks of litigation or the “as to
optimal settlement terms for the judgment of the litigants
and their counsel, ” Robinson v. Shelby Cty. Bd. of
Educ., 566 F.3d 642, 649 (6th Cir. 2009) (quoting
Armstrong v. Bd. of School Directors of City of
Milwaukee, 616 F.2d 305, 319 (7th Cir. 1980)).

The
Court also finds that settlement of the collective action
claims is appropriate and will be approved by the Court
because the parties diligently litigated a bona fide
dispute over the claims for unpaid hourly wages, and the
proposed settlement distribution represents a reasonable
compromise of those claims. The right to payment at the
minimum hourly wage mandated under the FLSA ordinarily is not
one that may be waived or compromised by an employee's
consent. Brooklyn Sav. Bank v. O'Neil, 324 U.S.
697, 713 (1945). However, “[w]hen employees bring a
private action for back wages under the FLSA, and present to
the district court a proposed settlement, the district court
may enter a stipulated judgment after scrutinizing the
settlement for fairness.” Lynn's Food Stores,
Inc. v. United States Dep't of Labor, 679 F.2d 1350,
1352-53 (11th Cir. 1982). In this case, the Court finds that
the settlement embodies “a fair and reasonable
resolution of a bona fide dispute over FLSA
provisions.” Id. at 1355.

Plaintiff's
counsel has requested, and the defendant agrees to pay, an
attorney's fee of $230, 000, of which $6, 375.38
represents reimbursement for costs expended. Attorney's
fee awards in class actions are governed by Rule 23(h), which
permits the Court to “award reasonable attorney's
fees and nontaxable costs that are authorized by law or by
the parties' agreement.” The fees requested and
agreed by the parties are appropriate under both the
percentage-of-common-benefit and lodestar methods of
assessment. Both methods are acceptable as a means of
evaluating the reasonableness of attorney's fee requests,
but the Court must furnish reasons for choosing one over the
other. Rawlings v. Prudential-Bache Properties,
Inc., 9 F.3d 513, 516 (6th Cir. 1993). The objective in
such cases is to “make sure that counsel is fairly
compensated for the amount of work done as well as for the
results achieved.” Ibid. In making the choice
of methods, the Court must be mindful that “[t]hese two
measures of the fairness of an attorney's award - work
done and results achieved - can be in tension with each
other. The lodestar method of calculating fees ‘better
accounts for the amount of work done, ' whereas
‘the percentage of the fund method more accurately
reflects the results achieved.'” Gascho v.
Glob. Fitness Holdings, LLC, 822 F.3d 269, 279 (6th Cir.
2016) (citing Rawlings, 9 F.3d at 516).

Here,
the plaintiff has submitted documents verifying that the
lodestar fee would amount to $264, 943.35, based on a blended
average hourly rate of $409, which the Court finds to be
reasonable, warranted, and customary in the legal community
among lawyers with similar experience. The hours expended
were reasonable and necessary to prosecute this case. The
lodestar, although not the better method to determine the
attorney's fee, provides a valuable crosscheck in the
amount requested, which represents a third of the potential
gross recovery and creation of the common benefit fund.
Although the entire negotiated fund will not be paid under
the settlement, the Sixth Circuit “has held that class
plaintiffs' ‘right to share the harvest of the
lawsuit upon proof of their identity, whether or not they
exercise it, is a benefit in the fund created by the
efforts of class representatives and their
counsel.'” Gascho, 822 F.3d at 278
(quoting Boeing Co. v. Van Gemert,444 U.S. 472, 480
(1980)) (emphasis added). Despite its earlier reservations
expressed on the record at the fairness hearing, the Court
now finds the fee request reasonable and will approve it.

Accordingly,
it is ORDERED that the plaintiffs'
motion for approval of settlement and plan of allocation
[dkt. # 128] is GRANTED for the reasons
stated on the record.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;It is
further ORDERED that the settlement
agreement and plan of ...

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